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인터 파르팜스(Inter Parfums, Inc.)는 여러 자회사를 통해 향수 및 관련 향(香) 제품의 글로벌 개발, 마케팅, 유통에 종사하고 있습니다. 회사의 사업은 크게 두 ...
인터 파르팜스(Inter Parfums, Inc.)는 여러 자회사를 통해 향수 및 관련 향(香) 제품의 글로벌 개발, 마케팅, 유통에 종사하고 있습니다. 회사의 사업은 크게 두 ...
Operator: Greetings, and welcome to Interparfums 2026 Conference Call and Webcast. I would now like to turn the conference over to your host, Mr. Devin Sullivan. Thank you. You may begin. Devin Sullivan Thank you, Rob, and good morning, everyone. Joining us on the call today will be Chairman and Chief Executive Officer, Jean Madar; and Chief Financial Officer, Michel Atwood. As a reminder, this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from projected results. These factors may be found in the company's filings with the Securities and Exchange Commission under the headings Forward-Looking Statements and Risk Factors. Forward-looking statements speak only as of the date on which they are made, and Interparfums undertakes no obligation to update the information discussed. Interparfums' consolidated results include 2 business segments, European-based operations through Interparfums SA, the company's 72% owned French subsidiary and United States-based operations. It is now my pleasure to turn the call over to Jean Madar. Jean, please go ahead. Jean Madar: Thank you, Devin, and good morning, everyone, and thank you for joining us on today's call. We are pleased -- very pleased with our performance at the midpoint of the year, which reflects the appeal of our global brand portfolio and the strength of our underlying business and also the disciplined execution and also the continued dedication of our team. Despite the challenges that persist in our business and industry, these results gives me confidence in our ability to deliver on our full year objectives and continue on the path towards creating long-term value for our shareholders. So we delivered 2% sales growth in both the second quarter and first half of 2026, supported by strong performance from several of our leading brands and a strong rebound in our United States-based operation of an admittedly weak comparison. Excluding the war-related headwinds in the Middle East, organic sales advanced 4% in the quarter and 1% year-to-date. And we maintained a robust financial position while continuing to invest in product initiatives that position us well for the balance of the year and beyond. Consolidated sales growth in the first half of the year reflects strong brand execution and solid performance in select regions, partially offset by macro and regional headwinds. North America, our largest market, was up 5%, propelled by a healthy category, a steady cadence of new extensions, most notably from Coach and marketing investments that are clearly paying off. Asia Pacific was a highlight, up 14% as initiatives supporting Coach and Montblanc took hold. GUESS extended its footprint in Australia and New Zealand and our new Korean affiliate got off to an excellent start after several years of uneven results in the region. We are also encouraged that consumers across Asia Pacific are increasingly embracing the fragrance category, and we are moving quickly to capture that opportunity. In India, for example, we recently teamed up with a new distributor to bring Coach, Montblanc and Jimmy Choo and several of our other brands back to one of the world's fastest-growing beauty market. Also, South America rose by 15% behind the continued success of Coach for women and Montblanc's Legend line. Partially offsetting growth from these geographies, a few regions declined in the first half. Western Europe with 3% on softer consumer demand. Eastern Europe was down 7% amid operational difficulties in certain markets, which weighted most heavily on Lanvin and Lacoste. And of course, Middle East and Africa fell 24% as the war in the region continued to weigh on our results. Even with these pressures, our diversified footprint allowed us to grow overall, which speaks to the resilience of our model. Looking at our brands, momentum in the first half was broad and several of our largest properties finished the second quarter with real strength. Coach grew 10% in the first half, driven by strong performance in the U.S., its primary market, driven by continued demand across most existing lines and by the launch of new extensions in the Coach Women and Coach Men franchises earlier in 2026. Montblanc advanced 6% in the first half of 2026 due to favorable exchange rates and the ongoing success of the Montblanc Explorer Extreme line and the strength of the Legend franchise. With sales holding firm in the second quarter and the first franchise arriving in 2027, we see plenty of runway ahead for this brand. Next, Jimmy Choo was up 8% for the half year, capped by an impressive 23% jump in the second quarter. The brand's fragrances are winning over more and more customers, particularly in the U.S., thanks to the enduring popularity of I Want Choo and a very successful debut for Jimmy Choo Man platform. GUESS, largest U.S.-based brand rose 11% in the first half, including [indiscernible] in the second quarter. The iconic franchise keeps delivering now bolstered by Iconic Blue for men and the newest Amore extension, Amore Napoli, which was launched in the second quarter. The brand's reach keeps widening as well. Today, for instance, GUESS stands among the top 15 fragrance brand in Australia. Let's talk about Ferragamo. Ferragamo sales jumped by 41% in the second quarter, bringing first half growth to 17%. Growth was geographically broad with the Signorina? and Ferragamo lines performing very well, elevated by their latest launches introduced in late 2025. We rolled out a commercial innovation program across the brand franchise in May, which further enhanced the brand's growth, including our newest extension, Fiamma Assoluta, which has seen very positive feedback so far. During the second quarter, Chinese singer and actor, Karry Wang joined the Ferragamo family as the brand's global fragrance ambassador. As mentioned earlier, Asia Pacific is increasingly embracing fragrance. We are hopeful that Karry's affiliation with Ferragamo will further elevate the brand in this burgeoning market. Donna Karan/DKNY climbed 12% in the first half, punctuated by a 28% increase in the second quarter with healthy demand across categories and franchise and e-commerce becoming an increasing search engine for the brand's growth. The [indiscernible] remains a fixture on TikTok Shop and Amazon. Roberto Cavalli grew 8% in the first half, fueled by this year's introduction across several franchises, among them the unisex scent Marbleous Cypress and several other fragrances launched earlier this year. Serpentine?continues to be a massive success for the brand globally. The war in the Middle East is certainly impacting this brand, and Cavalli is our largest brand in the region. Notwithstanding the world impact, our conviction and excitement on the trajectory of the brand remains strong. A few brands faced steeper comparison. Lacoste came in 16% below last year when a string of heat launches lifted first half sales of 44% and conditions in Eastern Europe added pressure. We introduced L.12.12 Bleu for men during the second quarter and with major initiatives lined up for 2027 and 2028, we believe the brand's best performance lies ahead. Recognition keeps coming for our fragrance as well. Bella Blanca from Oscar de la Renta took home the Best Eau de Parfum at The Marie Claire Fragrance Awards 2026 and Ferragamo, Signorina Romantica was honored as the best true?gourmand fragrance at the Who What Wear?Fragrance Awards 2026. Honors like this celebrate the artistry of our team and partners and add to the desirability of our portfolio. Even as consumers remain increasingly selective about how they allocate their products, in the United States, fragrance was once again the fastest-growing beauty category in the first half, owing to its status as an affordable indulgence and daily form of self-expression. The market has normalized after several years of exceptional growth, but the opportunity remains attractive. For us, is very clear, win share with brands that have personality, quality and global reach. Across our portfolio, we have many ways to speak to consumers and that diversity is one of our greatest strengths. Beyond the success and innovation from our core brands so far this year, we also made significant strides in developing and expanding our newest portfolio of brands. [indiscernible] rebuilding momentum in high-end fragrance with existing slots having resumed distribution and reopening of Paris boutiques. We are also preparing the launch of new fragrances in 2027. Lastly, newly created wholly-owned brand Solferino extended to 100 total point of sales at the end of first half this year, and we plan to launch an 11th fragrance to the initial collection in the second half of this year. And we are also preparing for the first launches of new fragrances for Longchamp and Off-White in 2027. Longchamp has the potential to become our next $100 million brand and Off-White represents another step for us into the high-end category. The layer on top of that, that is the extraordinary rise of digital commerce, which remain a growth driver for us in the second quarter, highlighting Amazon and TikTok Shop. Amazon now sells more beauty online than anyone else in both the U.S. and Europe. While TikTok Shop has become the fourth largest beauty e-commerce platform in the U.S. and is quickly expanding across Europe. We will stay ahead of the curve to identify evolving behaviors, continuously adapt how, where and when we engage. So we meet consumers not just where they are but where they are leading. Consumers are also making personal layering sense, assembling fragrance, wardrobes and turning to AI-powered recommendations to buy discovery. However, they choose to find us on social media on the major marketplaces or in stores, we are meeting them with storytelling that carries across every channel and delivers an immersive consistent brand experience. Ultimately, this business is about inspiring desire, offering consumers an entry point into the world of an iconic fashion house or celebrity, and we work every day to keep the desire running across each of our brands. Travel retail remained a steady contributor, once again accounting for roughly 7% of total net sales, in line with prior periods. New York is where the channel is strongest today with conditions softer elsewhere, including, of course, the Middle East, and we see steady growth ahead for this business. I will briefly touch on tariffs given the newest round implemented under Section 301. As a reminder, our manufacturing is based primarily in Europe and the rates we faced under this latest wave are largely in line with what we were already operating under. So we don't expect to see meaningful changes to our cost structure going forward. That said, we are not standing still. We are increasingly working to position our distributors closer to the point of sale, which shortens supply lines and helps mitigate tariff impacts while keeping our brands close to the consumer. We are also working on cost saving initiatives to... [Technical Difficulty] Operator: Okay. Please remain on the line. Okay. Our speaker is back with us. You can continue. Jean Madar: I'm so sorry. I don't know you lost me. But anyway, I'm at the end of my comments. So we are saying that while the environment remains anything [indiscernible], we are demonstrating that we can do more than manage through turbulence. We can grow through it. The fragrance category remains resilient. Our brands are performing and we're on track to deliver on our goals this year. We remain cautiously optimistic about the balance of '26, mindful of disruption in the Middle East, but energized by improving trends we see elsewhere and confident in our ability to keep operating efficiently and profitably while driving disciplined, sustainable long-term growth for our customers, brand partners and consumers. With that, I will now turn it over to Michel for a review of our finance. Michel? Michel Atwood: Yes. Thank you, Jean, and good morning, everyone. I will begin by discussing the consolidated results before breaking them down into our 2 operating units, European and United States-based operations. Overall, the diversity of our portfolio continued to support global growth with strength in select brands and geographies, offsetting softness elsewhere and driving our overall results. This year's U.S.-based results benefited from a favorable comparison against last year's second quarter, which was weighed down by weaker innovation and tariff-related supply chain disruptions, whereas our European results are cycling a prior year period of strong growth and therefore, faced a much tougher year-over-year comparison in the current quarter. Echoing Jean's comments, we maintain a strong financial position, operated with efficiency and continued to invest in our brand portfolio. Net sales grew modestly in 2026 second quarter and first half with reported sales of 2% in each period. These were helped by foreign exchange. Organic growth in 2026 periods was impacted by lingering headwinds associated with the war in the Middle East. Excluding these factors, organic growth improved by 4% in the second quarter and 1% in the first half, respectively. Our 7 largest brands, which represented 81% of our first half sales grew 6% and our expanding direct-to-retail channel, which represented 42% of first half sales grew 9%. Furthermore, our top 20 brand region combination, which represent 84% of our sales grew a healthy 7%, showcasing the overall strength of our core business. While the stronger euro has continued to favor our top line, it also increases our cost base across the P&L and our balance sheet. We are continuing to implement a variety of actions to mitigate that impact and have been pleased with the results. While gross margin declined slightly in the 2026 second quarter, first half gross margin expanded by 30 basis points to 65.3% from 65%, and this was primarily driven by a favorable segment, brand and channel mix as well as lower destruction costs, which reflect our continued focus on inventory and supply chain management. These gains were partially offset by tariffs, which represented a net additional expense of $8.2 million in the first half of 2026 compared to last year. As of June 30, 2026, the company also received $8.7 million in IEEPA tariff refunds, of which $6.9 million was recognized as a nonrecurring reduction in cost of sales in the second quarter. In July 2026, we received the remaining balance of the $17.6 million in IEEPA tariff refunds owned. These funds will benefit quarter 3 and quarter 4 of this year. For the total year, we expect gross margins to improve by roughly 150 basis points with 110 basis points improvements coming from the tariff refunds and the balance coming from favorable brand and channel mix as well as cost efficiency programs. Higher SG&A expenses for the 2026 period resulted from higher brand marketing investments, royalty costs growing ahead of sales due to unfavorable brand mix as well as higher logistics costs related to supply chain transitions and channel mix. Our A&P spending for the first half of '26 rose to $129 million or 18.8% of sales. This reflects our ongoing commitment to investing in our existing brands and upcoming launches. We are reinvesting the tariff refunds to protect our top line growth and position the company for a successful 2027. As such, we anticipate that on a full year basis, A&P expenditures will approach our long-term target of approximately 21% of net sales. For the first half of 2026, consolidated operating profit declined to $123 million with an operating margin of 17.9% compared to an operating margin of 20% in the prior year period. Below the operating line, other income and expenses swung to a gain of $0.4 million in the first half from a loss of $6.7 million in the prior year period, a positive impact of $7 million. The improvement was driven by higher interest and investment income, reflecting a stronger ROI on our excess cash and gains on marketable equity securities as well as lower foreign exchange losses. Our consolidated effective tax rate was for the first half was a stable 24.2% compared to 24.3% in the prior year period. And for the first half, net income held stable at $74 million, or $2.31 per diluted share compared to $2.32 in the prior year period. Now moving to our 2 business segments. I will start with European-based operations. Net sales declined modestly 4% in the second quarter and 1% in the first half with 5% organic declines in each period, partially offset by favorable foreign exchange. I will again note that our European-based operations completed -- competed against a very high growth comparison in the prior year periods. Gross margin was at 67.4% in both the second quarter and the first half versus 68.3% and 66.9% in the prior year periods. The quarterly decline was driven by unfavorable brand and channel mix, along with higher tariff costs that were partially offset by onetime tariff refunds. The year-to-date improvement was supported by mix, lower destruction costs and $2.7 million of IEEPA tariff refunds, partially offset by tariffs, which represented an initial expense of $4.5 million. SG&A increased 8% in the second quarter and first half, rising to $125 million and $229 million or 53.9% of net sales and 47.4% in the second quarter. The driver of the higher marketing is tied to product launches and brand investments. Royalty costs also grew ahead of sales, driven by unfavorable brand mix. Employee-related costs expanded as we continued building up our Korean subsidiary, and we saw higher logistic costs related to increased warehousing fees and supply chain transitions. Overall, net income attributable to European-based operations declined to $23 million for the quarter, representing 10% of net sales compared to 13.6% in the prior year period. For the first half, net income attributable to European-based operations was $73 million, representing a very healthy 15% of net sales compared to 16.6% in the prior year period. Now turning to our United States-based operations. Unlike our European-based operations, these results benefited from a favorable comparison base as second quarter 2025 results were negatively impacted by the factors we discussed earlier. With that context, net sales rose 18% in the second quarter, reflecting organic growth of 17% and a 1% positive foreign exchange impact. This performance lifted first half sales growth to 10%, comprising 8% organic growth and 2% foreign exchange tailwind. Gross margin expanded 90 basis points to 61.6% from 60.7% in the second quarter and 60 basis points to 60.3% from 59.7% for the first half. Tariff refunds representing $4.2 million as well as lower levels of destruction costs helped offset unfavorable channel and product mix and higher ongoing tariff costs. SG&A grew 9% in the quarter and 6% in the first half, each below our sales growth. As a result, SG&A declined as a percentage of net sales to 44.2% and 46%, respectively, compared to 48% and 47.8% in the prior year periods, reflecting productivity gains from accelerated sales growth and partially offset by unfavorable brand mix on royalties. Overall, net income attributable to U.S.-based operations grew to $15 million for the quarter representing 13.7% of net sales compared to 10% in the prior year period and to $24 million in the first half, representing 11.4% of net sales compared to 9.6% last year. Moving to cash. At June 30, our balance sheet remains strong with $211 million in cash, cash equivalents and short-term investments and working capital of $664 million. From a cash flow perspective, accounts receivable declined 3% from year-end 2025 and days sales outstanding decreased slightly to 73 days from 74 days in the prior year period. These were driven by changes in our channel mix. We continue to see strong collecting activity and do not anticipate any issues with collections of account receivable. Despite foreign exchange headwinds on our costs, inventories declined 12% to $376 million compared to the prior year period, representing a 34-day reduction in inventory days on hand to 269 days as we continue to drive inventory efficiencies and work to increase the conversion of raw materials into finished goods. By effectively managing working capital relative to our sales growth, we again significantly improved our operating cash flow. Cash flow generated from operating activities reached $46 million in the first half or 49% of net income, up from $5 million or 5% of net income in the prior year period. Obviously, operating cash flow also benefited from the receipt of the $8.7 million in IEEPA tariff refunds, but we continue to expect strong free cash flow productivity in 2026 and beyond. Now, as noted in our Form 10-Q, our Board has authorized a share repurchase program as an additional capital allocation tool. This gives us flexibility to evaluate potential repurchases of shares of Interparfums, Inc. or shares of Interparfums SA or both, depending on market conditions, liquidity, relative valuation and other business priorities. The Board has also authorized the company to enter into a line of credit of up to $250 million to support the program, enhancing our financial flexibility and optionality without obligating us to draw the full amount or complete any specific level of repurchase. We intend to approach the program in a measured and disciplined way while continuing to prioritize the needs of the business, strategic investment opportunities and long-term value creation for our shareholders. Now turning to our 2026 guidance and outlook. As outlined in our earnings release issued last evening, we are maintaining our full year outlook. We continue to expect sales of approximately $1.48 billion and diluted earnings per share of $4.85. Our EPS guidance includes the expected benefits of the $17.6 million of tariff refunds we have received this year, which is enabling us to reinvest in A&P and offset higher-than-expected tariff and logistic costs. With refunds received, we will reinvest in our brands to drive growth. We continue to anticipate a return to improved growth in 2027, driven by enhanced innovation, including a series of blockbuster launches planned for '27 and '28 as well as the development and distribution of our newest brands that Jean talked about. Overall, we remain mindful of external pressures, including the war in the Middle East, moderating demand in several international markets, overall economic concerns and pressures that may arise from recently enacted tariffs on our cost structures, but we are continuing to closely monitor potential inflationary impacts as suppliers adjust pricing. Nevertheless, we remain well positioned with a strong innovation pipeline, enduring global partnerships and a resilient consumer base that collectively reinforce our confidence in our long-term growth and value creation. With that, Rob, please open the line for questions. Operator: Our first question comes from Sydney Wagner with Jefferies. Sydney Wagner: So first one, maybe just to ask about the consumer. You mentioned some consumer selectivity. Can you just talk about how that's manifesting itself in fragrance? I understand that the category overall has been strong, but maybe are you seeing fewer add-ons, buying smaller sizes? Or has this driven kind of a shift toward promotional occasions? I guess within that, maybe also just comment on the promotional environment. And then on China, we've heard some reports of international players now doing better in China versus domestic brands. Are you seeing any change in consumer demand or sell-through trends there that have improved versus maybe what you've seen 6 to 12 months ago? Jean Madar: Michel, do you want to start? Michel Atwood: Yes. Sure, Sydney. Look, overall, we continue to see healthy demand. We're not seeing any significant increases in promotionality. I mean, there was certainly over the holiday season last year, there was a little bit more gift sets than we typically see in the holiday period. But overall, I would say it's been -- it's quite normalized and a lot of the price increases that have been taken have kind of stuck. I know that there have been some conversations around the entry price points and smaller sizes. We're not really seeing anything in that space. It's pretty much normalizing. In terms of China, the market is actually doing quite well, and we're seeing some significant growth there. But again, the China fragrance market is generally quite small for us, but it's been growing and it's been actually quite healthy. Jean? Jean Madar: Yes. There is no particular increase of small size, and we do not see any more -- no particular promotional activity. So we will not have anything special to report on that. Regarding China, what we can see is that when we are able to find and sign celebrity ambassadors that have hundred millions of followers, of course, this accelerate the sale. And that's what we are doing for Ferragamo, for Coach. And going forward, we will definitely continue to hire this very, very big celebrity to be the ambassadors and to talk about the brand, which is what in China. Operator: Our next question comes from Susan Anderson with Canaccord Genuity. Susan Anderson: I was wondering if maybe you could just expand on some of the blockbuster launches you see coming next year. Maybe if there's any color you can provide on timing of them flowing through in 2027? And then also, I guess, the same with the new licenses, Longchamp and Off-White, how are you thinking about those flowing through for the year? And then just in terms of the investment around those new launches and licenses, how should we think about that flowing through the income statement? Jean Madar: I can try to answer the first part of the question. I will let Michel talk about the investment. '27 is going to be impressive because all our big brands, all our big brands, the ones that are doing [ $100 million ] and above will have a blockbuster. So for the people who are not familiar, blockbuster means whole new launch, whole new pillar, so Montblanc, Coach, GUESS, Jimmy Choo, all will have blockbuster. It's quite unusual for us, usually, it doesn't happen all in the same year. So the cadence will be across all the quarters. We are not going to launch all January 1. It will be cadence during the year. It's difficult to give you what is the impact really when we have blockbuster in one of our brands, it has a halo effect on the whole brand. So that's why we can expect when we have blockbuster to have growth of high single digits, sometimes low double digit. So it will be very exciting, and it will continue into 2028 also. Michel, do you want to talk about investments? Or maybe investment. Longchamp, Off-White. Longchamp is very exciting. Finds a beautiful brand known for their bags. We had great success with Coach. So we think that Longchamp will be also very successful. We showed the products to all our distributors, retailers, and the response is very positive. So that's why I said in my remarks that Longchamp has the potential to become quickly a $100 million brand. Off-White is going to be also interesting because this is not a license. This is a trademark that we bought 1.5 years ago, and we will be launching men's and women's fragrance in the end of first quarter next year. Michel, if you want to talk about investments? Michel Atwood: Yes, sure. Thanks, Jean. So investment side, obviously, when you have significant launches, you will have to invest more. But our thinking is that we'll be able to kind of cover this within the rest of the P&L. We should get -- if we get significant sales acceleration, we should see some scale benefits on the rest of the P&L. So really, our goal is to fund this within the P&L. But again, until we actually put together the plan, the sequencing, we won't have any clear visibility to that. Again, #1 priority for us remains profitable top line growth, and that's really where we're going to continue to head over the next couple of years. Operator: Our next question comes from Jonna Kim with TD Cowen. Jungwon Kim: The first one is, how are you measuring your efficiency of marketing spend as you continue to invest in that? Any key channels and priorities that you could talk about would be helpful. And then second question, what would take you to raise guide at this point? What are key factors you're currently monitoring for the guide? Jean Madar: Michel? Michel Atwood: Yes, sure. I mean we measure the ROI of our spending. I mean most of our spending today is really done on digital and as well as on social media, and using influencers. And so we have tools to kind of measure what is working, what's not working. And generally, that's where we're flowing most of our dollars. We're also flowing a lot of our dollars really towards the fast-growing channels, which as Jean pointed out, Amazon, TikTok, online. So really, those are the areas. In terms of increasing our guidance, obviously, I think there are a number of things in the second half that we're kind of waiting to see what happens. As you could probably have seen, I mean, we have done a little bit better on the top line than we were originally planning. We have been helped by FX. We're starting to see FX move in the opposite direction. There's also the considerations in the Middle East and Eastern Europe, which have kind of been weighing down on our growth. So I think if things improve there, that may help us. But again, it's going to depend on when that happens during the year. I would say that, that's the main element. And then on the rest of the P&L, I think it's going to probably be very similar to what we saw kind of last year with the exception of A&P, which we're expecting to continue to fuel more investments in A&P to shore up the growth. Jean, I don't know if you have any questions on that. Any other comments on that, Jean? Jean Madar: No, no. I think you covered. I totally agree. Our guidance is always a difficult to exercise because there are so many parameters that we have to take into account. But right now, we are comfortable with the actual guidance. Next question? Operator: Our next question comes from Aron Adamski with Goldman Sachs. Aron Adamski: I have 3. Firstly, on inventory levels. As we enter the peak fragrance trading period, how would you assess retailer and distributor inventories at this stage across the U.S. and Europe? Are there any pockets of elevated stocks that could lead to destocking? Second, just to actually follow-up on the 2027 launch cycle. I believe the juices for these products are now ready. So I was wondering how complementary from an Olfactory standpoint, do you expect these new products to be? Or would you expect to see some cannibalization within the portfolio as you launch these? And then lastly, on the outlook for the remainder of the year, how should we think about the growth cadence between Q3 and Q4? Are there any specific phasing factors to consider? And similarly, on profitability, how do you expect gross margin and operating margin progression to develop across the 2 remaining quarters? And if there are any phasing factors to consider? Jean Madar: Thank you, Aron. I'll let you start and I will comment. I didn't really understand, Aron, your second question about the 2027 launches. Aron Adamski: Yes. So just to clarify, the [ scent ] profile, I guess, of these new products, do you expect them to be complementary to your current offering? Or is there some risk of cannibalization? Jean Madar: Okay. Okay, of course. Okay. All right. Let's start. Michel, do you want to start with inventory, please? Michel Atwood: Yes. Let me start with inventory. So overall, we're finding that the destocking is really kind of starting to normalize. And we're not really seeing any significant areas where there's very high inventory levels or very low inventory levels. But I would say, overall, we're feeling pretty comfortable. Even though I'd say structurally, inventory will probably continue to go down for the reasons we have explained in the past, which is as people become more and more efficient, as more and people buy online, there's naturally going to be less inventory in the system. But overall, we're not really seeing some of the concerns that we had, I would say, over the last 12 months, it seems to be normalizing. Jean, I don't know if you want to add anything on the inventory piece. Jean Madar: Yes. This is, of course, something that we look at very carefully, and we monitor inventory at the level of our distributors and when we have information at the level of our retailers. And I will say that inventory at both levels are quite low in the sense that they are well managed by our distributors and by the retailers. They are ordering on a weekly or every other week basis. So I don't see any heavy inventory in stores, maybe a little light for certain people like Amazon and TikTok, but their business is growing at a fast pace, and sometimes we have difficulty to anticipate their need, which is a good problem to have, but we need to be vigilant to make sure that we don't miss any business there. I don't see too much -- I don't see destocking like you said, Michel. Michel Atwood: Okay. Maybe I'll touch on the outlook for the rest of the year, and then we can go back to the second question on the launch cycle. So as you know, Aron, we don't really like to guide by quarter. It's difficult enough to guide for the year in the current environment. What I can say is that if you look at our guidance, the implied -- it implies a 3% decline in the second half versus last year. There's going to be about 1 point of that that's going to come from FX. As you know, we had a higher FX has helped us in the first half, but we expect it to hurt us. Again, there's a big question mark around that. And then if you look at the third quarter versus the fourth quarter, last year, fourth quarter was stronger. So I kind of would expect that as you balance that off between the third and the fourth quarter, it look a little bit better in the third and a little bit worse in the fourth. I don't know if that helps on the top line. On the on the SG&A side -- or sorry, on the cost of goods side, frankly, it's really going to depend on how we account for these tariff refunds that's going to be -- that's going to drive the impact. As you know, the tariff refunds are based on not when the money comes in, but when we think it actually hits our P&L. So there could be some significant helps in the third quarter coming from that, but we haven't really modeled that out yet. That's something that we'll be working on over the next couple of weeks. And then on the SG&A side, I would say most of the A&P increase that you're seeing in the second half is going to be mostly on the third quarter. We generally always have a very, very strong fourth quarter. And so you'll see those investments primarily more in the third quarter to strengthen the third quarter in preparation of the key consumption period in the fourth quarter. So I don't know if that -- Jean, if you had anything you wanted to add on that, please? Jean Madar: No, no, that's your part. Okay. So the scent profile, this is a very interesting question. So we're going to launch, as we said, a lot of new blockbuster next year. And of course, when we started to think about what we are going to launch, and this takes 18 to 24 months, we do a mapping of [indiscernible] is mapping to make sure that what we are going to launch doesn't cannibalize or doesn't go into the territory of the other franchise. So basically with new blockbuster, we're going to try to get new customers, maybe a different age, maybe a different taste, maybe a different geography. So this question is very interesting because we look for each brand at the spot that we are reaching, and we -- that's what we want to accomplish. So of course, a cannibalization could happen, but we're looking at additional events. Michel Atwood: Yes. Maybe just to build on Jean, I mean, when we design a blockbuster, the key is really to identify an unmet need from a consumer standpoint. What is the -- we look at the existing consumers and we look at why certain consumers are not buying. And if those consumers are not buying the list but are interested in the brand, we try to develop a consumer proposition that is going to cover some of those unmet needs. And so it's not always about necessarily of active profile, but it also has to deal with also the consumer proposition and the packaging and the concepts and a lot of areas like that. This is one of the reasons why it's so critical that it takes time to do this properly. The other area also that comes into effect on cannibalization is the level of incremental investments. So if you rob Peter to pay Paul, you definitely won't get -- you may get the uplift, but you'll see more cannibalization. And again, coming back to the question we got around investment profile, those are some of the areas that we have to look into as we start working through our 2027 plan, how aggressively do we want to invest relative to the potential risk of cannibalization. And again, there, the idea is to privilege profitable top line growth. Operator: Our next question comes from Fraser Donlon with Berenberg. Fraser Donlon: Jean and Michel, it's Fraser here from Berenberg. I have 2. So the first was just to ask about some of the kind of smaller retail brands in the portfolio because I think you have maybe 3 with -- which are expiring in 2026 or with extension options, which may not be taken up. I don't know. So like how are you thinking about that internally? And I guess the add-on to that would be, is there still an appetite to add potentially larger brands, either within the EU ops or the U.S. ops? And then the second question was just on your inventory into year-end. How should we think about that given you do have this really kind of strong pipeline building for 2027 when it comes to your own inventory? Jean Madar: Michel, do you want to start talking about the small brands? Michel Atwood: Yes. I mean, obviously, when we look at our portfolio, as you know, we have added a lot of larger brands, and we've also have a pipeline of brands that are coming with both Nautica and David Beckham. Ultimately, while our business model enables us to manage all types of brands quite efficiently in terms of capacity utilization and allocation of resources, we always look at these smaller brands towards their end of their life cycle, and then we'll make decisions in conjunction with the existing license partners. Again, we can't typically comment on those things until we're advanced. But I would say, generally, the smaller brands in the portfolio and when they get -- when they come to the end of their useful life, and don't necessarily make sense in our portfolio anymore, those are things that we are considering. And we have talked about building 1 to 2 points of headwinds to account for those things. Jean, I don't know if you want to comment on the smaller brand. Jean Madar: Yes, agree. But no, I would like to comment on new license and new brands. We are still actively looking for more license. As Michel mentioned, we're going to have David Beckham brand and Nautica joining the portfolio when the actual license. And we still have time for that. But we are actively talking to other brands, either some that have fragrance license already and some that do not have yet fragrance license. And we feel that with the organization that we have, with the diverse portfolio that we have, we can still accommodate new brands either in Paris or in New York. Michel Atwood: Yes. And then on the inventory, of course, inventory buildup will be dependent on actually when we phase and when we launch. But overall, I think we're feeling pretty good about the progress that we've been making on inventory, and we feel confident that we should see a much better position at the end of this year than what we had last year. Again, hard to really say until we actually have a clear read on our inventory buildup. But not all of our launches are going to happen on January 1 next year. Some of them are going to happen in the back half of the year. So yes, we should see some of these improvements that we've seen now across the various quarters continuing into year-end. Operator: We have reached the end of the question-and-answer session. I'd now like to turn the call back over to Michel Atwood for closing comments. Michel Atwood: All right. Thank you, Rob. Thank you all for joining us today. Jean and I really want to recognize our teams, our partners, our brands and all of our stakeholders whose dedication, trust and agility continue to drive efficiency and support our success as we navigate our uncertain environment together. I would also like to mention that I'll be participating in the Canaccord Annual Growth Conference in Boston on August 11 and 12, so next week. So if you'd like to participate, please reach out to your sales representative at Canaccord for information. And if you have any additional questions, please contact Devin Sullivan or Conor Rodriguez from The Equity Group, our Investor Relations representatives. And thank you, and have a great day. Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.